Wix.com Ltd. WIX has exhibited impressive price performance in the past year. Notably, shares of Wix.com have returned approximately 42.1% year over year, outperforming the industry’s growth of 1%. The stock has also outperformed S&P 500 index’s rise of 6.3%.
We note that Wix.com has delivered a positive earnings surprise of 67.3% in the trailing four quarters.
Let’s delve deeper and analyze the factors driving Wix.com’s robust performances.
Recently, the company unveiled a suite of 20 products, Ascend by Wix, which enable businesses to connect and manage their customer base. This in turn aids them in competing with larger businesses online.
The company also intends to launch Wix Turbo, a platform that enhances speeds across all Wix websites. Further. the company unveiled Wix Payments. The latest product is a complete payments platform designed to aid small businesses manage their financial flow addressing significant business challenges and helping them to grow.
The company also inked a deal with MyHeritage, which will be utilizing the Wix Answers Knowledge Base, ticketing system, and call center tools. Wix.com is also partnering with schools and universities all over the United States in order to make Wix part of the curriculum.
We believe that these product innovations and partnership deals bode well for Wix.com.
Going further, the company continues to launch a number of user-friendly applications to meet the requirements of a dynamic retail environment, in turn adding to its user base.
Moreover, it is benefiting from retail’s rapid transition to mobile and social sales channels. We believe that massive growth in e-commerce spending also bodes well for Wix.com. Further, the company’s sound liquidity and cash flow reflects that it is making investments in the right direction.
Wix.com delivered non-GAAP earnings of 42 cents per share in the fourth quarter of 2018, beating the Zacks Consensus Estimate of 30 cents. The bottom line was also higher than the year-ago quarter’s figure of 16 cent per share.
Total revenues surged 39% year over year to $164.2 million, surpassing the Zacks Consensus Estimate of $162 million. Collections during the reported quarter came in at $176 million, surging 33% year over year, attributable to expansion of new products and enhancement of existing products.
For the first quarter, the company expects revenues in the range of $172-$173 million, representing year-over-year growth of 25-26%. The Zacks Consensus Estimate for revenues is pegged at $172.9 million.
The company provided fiscal 2019 guidance. Management anticipates revenues in the range of $755-$761million. This reflects year-over-year growth of 25-26%. The Zacks Consensus Estimate for revenues is pegged at $760.6 million.
Solid Growth Prospects
Wix.com has solid growth prospects, as is apparent from the Zacks Consensus Estimate for fiscal 2019 and 2020 earnings per share of $1.19 and $1.80, respectively. This reflects year-over-year growth of 11.2% and 50.8% for 2019 and 2020, respectively.
Meanwhile, the company’s revenues are anticipated to increase by 25.9% in fiscal 2019. Moreover, revenues are expected to rise 23.5% in fiscal 2020. Overall, the company seems a great pick in terms of growth investment, supported by a Growth Score of A.
However, increasing investments on product development, infrastructure and platform continues to weigh on the company’s bottom line in the near term. Further, competition from peers is a major headwind.
We expect the aforementioned factors to aid the company sustain strong momentum and stay afloat amid difficult times. Consequently, we suggest that investors retain the stock for the time being.
Zacks Rank and Stocks to Consider
Currently, Wix.comcarries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Cadence Design Systems, Inc CDNS, Synopsys, Inc. SNPS and Symantec Corporation SYMC, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Cadence Design, Synopsys and Symantec have long-term earnings growth rates of 12%, 10% and 7.9%, respectively.
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